Crisis meeting sparks fear of Hong Kong clampdown

THE HONG Kong Monetary Authority has called in local banks to a crisis meeting in Hong Kong today in a move which has sparked fears of a Malaysia-style clampdown on financial market dealings.

Dealers said the meeting could signal that new steps to control the stock market were on the way.

Hong Kong government sources insisted last night that there was no question of introducing exchange controls since these were explicitly banned by Hong Kong's constitution. The meeting would centre on the discussion of measures to strengthen the existing currency board system which for the last 15 years has pegged the HK currency to the US dollar.

"It is not for me at this point in time to come to the specifics because that would need to be discussed with the banks," said HKMA's chief representative in New York. "I just want to put the message acrosss that the issues to be discussed will be centred around measures to further strengthen and purify the currency board system."

Hong Kong Financial Secretary Donald Tsang pledged earlier this week to introduce new measures to "improve transparency of the stock market". The package could be unveiled as early as Monday.

But the government is under pressure to find a way of convincing the markets that the dollar peg which has been the linchpin on the region's economic policy since 1983 can hold, in the face of an almost universal belief that devaluation is now an inevitability.

Rachel Chan who heads the Hong Kong Government's Economic and Trade Office in London insisted that the Hong Kong Government was committed to the free market and was not trying to introduce the kind of exchange and capital controls that Malaysia has brought in.

"A lot of governments in the region are trying to control the market. We are not going to be one of them," she said.

But such statements have failed to reassure foreign investors. "Hong Kong shorts are very nervous," said one dealer last night. He was referring to the international investors who have been selling or "shorting" the currency in anticipation of an imminent devaluation. The Hong Kong Monetary Authority is believed to have spent HK$120bn over recent weeks to support the Hong Kong dollar by buying shares in the market.

The HKMA has ended up with sizeable stakes in as many as 30 companies. But apart from the 8.9 per cent stake in Hong Kong & Shanghai Bank which it was obliged to disclose because of London stock exchange rules, it is refusing to release further details. The authority is also exerting pressure on brokers who have drawn up their own lists of HKMA holdings not to release those to the public.

It is nevertheless believed that the authority has large stakes in such well-known companies as Huchison Whampoa, the largest shareholder in Orange the UK mobile phone operator; Swire, which owns Cathay Pacific the airline, and Cheung Kong, the property company controlled by pro-China entrepreneur Li Ka Shing.

The intervention appears to have stabilised the stock market for the time being. The Hang Seng index closed up more than 2 per cent at 7488.47 yesterday, before news of the crisis meeting had come out.

Sport
sportGareth Bale, Carl Froch and Kelly Gallagher also in the mix for award
News
Japan's Suntory Beverage & Food has bought GlaxoSmithKline's Lucozade and Ribena
news
News
A tongue-eating louse (not the one Mr Poli found)
newsParasitic louse appeared inside unfilleted sea bass
Life and Style
The reindeer pen at the attraction
lifeLaurence Llewelyn-Bowen's 'Magical Journey' and other winter blunderlands
PROMOTED VIDEO
News
ebooksNow available in paperback
News
Tana Ramsay gave evidence in a legal action in which her husband, Gordon, is accusing her father, Christopher Hutcheson, of using a ghost writer machine to “forge” his signature
peopleTana Ramsay said alleged discovery was 'extremely distressing'
Arts and Entertainment
Robin Windsor and Aljaz Skorjanec rehearse their same-sex dance together on Strictly Come Dancing
TV
Money
Anyone over the age of 40 seeking a loan with a standard term of 25 years will be borrowing beyond a normal retirement age of 65, and is liable to find their options restricted
propertyAnd it's even worse if you're 40
Arts and Entertainment
Perhaps longest awaited is the adaptation of Jack Kerouac’s On the Road with Brazil’s Walter Salles directing and Sam Riley, Kristen Stewart and Viggo Mortensen as the Beat-era outsiders
books
Arts and Entertainment
theatreSinger to join cast of his Broadway show after The Last Ship flounders at the box office
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Argyll Scott International: Risk Assurance Manager

Negotiable: Argyll Scott International: Hi All, I'm currently recruiting for t...

Argyll Scott International: Business Analyst - MGA - London Market - Insurance Broker

£50000 - £60000 per annum + benefits: Argyll Scott International: A Business A...

Ashdown Group: PR, Marketing & Events Executive - Southwark, London - £35,000

£30000 - £35000 per annum + benefits: Ashdown Group: PR Marketing & Events Exe...

Selby Jennings: C++ Developer – Hedge Fund – New York

$80000 - $110000 per annum, Benefits: Bonus and Employee Investment Scheme: Se...

Day In a Page

How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital
In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran
The young are the new poor: A third of young people pushed into poverty

The young are the new poor

Sharp increase in the number of under-25s living in poverty
Greens on the march: ‘We could be on the edge of something very big’

Greens on the march

‘We could be on the edge of something very big’
Revealed: the case against Bill Cosby - through the stories of his accusers

Revealed: the case against Bill Cosby

Through the stories of his accusers
Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

The Meaning of Mongol

Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'